HDFC Life ProGrowth Flexi: Backdoor ‘cover continuance’ option?  

January 21, 2011

Flexible premium payment term facility appears to be another form of the cover continuance that was eased out by IRDA

HDFC Life has launched ProGrowth Flexi, a unit-linked insurance plan (ULIP) with a flexible premium payment term (PPT) facility that appears to re-introduce the 'cover continuance' option through the backdoor. Cover continuance was eased out from ULIPs by the Insurance Regulatory and Development Authority (IRDA) post effective 1st September 2010.

Under the new plan, a policy term of 10 years has a minimum PPT of five years, whereas a policy term of 15+ years has a PPT of 10 years. (There is no offer for the 11-14 years period.)

Paresh Parasnis, executive director and chief operating officer, HDFC Life, told Moneylife, "If a policyholder takes a 30-year policy term, he has the option to change the premium paying term to 10 years (instead of regular payments for 30 years) and the policy remains in force till the end of the policy term, provided the person assured lives through the entire tenure.

"This option may be exercised if the customer is not able to pay regular premiums due to some exigency. The customer has to inform us about this change after he has paid premiums for at least five years of the policy. If the policyholder does not inform us and the premiums remain unpaid, then the policy lapses and discontinuance rules are applicable," he explained."

ProGrowth Flexi has a minimum monthly premium of Rs2,500. In addition to the flexible premium payment term facility, the plan also has a flexible premium payment options and five investment funds. It offers annual, half-yearly, monthly premium payment options. The plan has an Extra Life option that includes a death benefit and accidental death benefit (additional sum assured). The plan has a 30-day free look-in.

The premium allocation charge is 7.5% in the first and second year, 5% from third through fifth year and 0% thereafter. The policy administration charge is zero for five years and 0.46% per month of the original annual premium thereafter. The total charges are in-line with other new ULIPs after 1st September 2010.

Announcing the new plan, Amitabh Chaudhry, managing director and chief executive officer, HDFC Life, said, "We continue to listen to our customers and design products that are flexible to meet their needs. HDFC Life ProGrowth Flexi is targeted at those customers who are seeking a life insurance plan that is affordable and flexible and at the same time provides value. Apart from the normal life cover, ProGrowth Flexi provides extra life cover with accidental death benefits option."

"It also has a 30-day free look-in, the first time anybody in the industry is offering this facility. As ULIPs under the new regulatory regime are different, we believe that customers need time to get familiar with the new generation of ULIPs and fully comprehend the benefits available," Mr Chaudhry said.

Entry and maturity age: Minimum age at entry is 14 years and maximum age is 65 years; maximum age at maturity is 75 years. If a customer chooses the accidental death benefits option, the minimum age at entry is 18 years and the maximum age is 55 years; the maximum age at maturity is 70 years.

Minimum Premium: For the annual option it is Rs24,000, half-yearly it is Rs10,000 and monthly Rs2,500. Maximum Premium: No limit
Minimum level of protection: For ages less than 45 years, a higher of 10 x annualised premium or 0.5 x policy term x annualised premium. Age 45 or above - the higher of 7 x annualised premium or 0.25 x policy term x annualised premium.

Maximum level of protection: 40 x annualised premium Premium Paying Term: For a policy term of 10 years the minimum premium paying term is five years; and for a policy term 15+ years it is 10 years.— Moneylife Digital Team